25 IRS Tax Myths Learn The Tax Facts

You may get a smaller tax refund this year because several tax credits — including the Child Tax Credit, Child and Dependent Care Credit, and Earned Income Tax Credit — have reverted to pre-pandemic levels. And the above-the-line deduction for charitable contributions of up to $300 was eliminated entirely. From a tax compliance perspective, the IRS doesn’t care if you’re selling drugs, robbing banks, or defrauding investors of millions. As long as you’re making money, the government is still entitled to their piece of the pie. Remember, no matter how well you cover you tracks when it comes to illegal activities, cheating on your taxes can come back to bite you—just ask Al Capone. The IRS does have the right to verify your return, but sitting on your couch waiting for them to file a return for you is likely to leave you sorely disappointed.

Myths About Doing Your Own Taxes

Plus, she says the IRS updates the site daily, so continue to check back in to see your status. No matter the case, you’re probably wondering if you can start deducting things such as your internet bill, office desk, computer, cheesy motivational posters, and everything else you need to get work done. If your pet is a service animal like a guide dog or if you have a therapy animal, you can deduct expenses you incur from training, purchasing, vet care, and buying food. HOWEVER, there are ways your pets can be leveraged on your taxes — specifically through deductions. For those who qualify, a home office is, in fact, deductible, but the IRS’s definition of “home office” is very specific. If you’re self-employed, own a small business, work from home, and have turned one of your home’s rooms into your office space, you qualify.

What You’ll Learn

They will usually work with you to set up an extension or payment plan, but they’re much less likely to be cooperative if you haven’t even bothered to file. You can get an extension to file your taxes by filling out a specific IRS document (Form 4868) that will give you six months — until Oct. 16, 2023 — to file your tax return, but not more time to pay your taxes. You can also get an automatic extension to file when you make an electronic payment with Direct Pay on IRS.gov. Even if you owe student debt, the IRS still expects that you pay taxes if you meet the minimum requirements.

Yes, you do need to have an aptitude for dealing with figures, but high level knowledge of math and finance are not necessary. So it’s entirely possible that the major corporation being roasted on the news for paying zero taxes is involved in some or all of the above factors. Also, while they may not be paying federal income taxes, there are also state, payroll, property, and excise taxes that they are paying regardless. We’re in the business of guiding people through complex financial situations.

FACT #2: You may still qualify for UI even if you are classified as an independent contractor.

While it would be an advantage for you to have a degree in accounting, it is not a must. This is because tax professionals myths https://turbo-tax.org/myths-about-doing-your-own-taxes/ falls under law, not accounting. It is possible to start a career in being a tax preparer even if you are not an accountant.

Just make sure not to default on the payment plan to avoid further complications. Learn the truth behind these IRS tax myths, along with some advice https://turbo-tax.org/ for how to navigate unique tax situations. Like many things in life, once you’ve filed your own taxes once, a lot of the drama vanishes.

Common Homeowner Tax Myths Debunked

You are able to make the dreaded task of tax preparation a pleasant experience by educating them in the tax laws and simplifying the task. We’re boring, it takes a long time to become one, we love math… These are lies! It’s time to tell the truth about tax preparers, and what it takes to become one, so, we wrote a blog post that lays out all of the myths we’ve heard over the years. The IRS expects you to report all income received, no matter the form. It may be especially tempting to hide cryptocurrency from your tax return since it’s an “invisible” currency with no paper trail.

  • Whether you are on the payroll does not determine if you are an employee or an independent contractor.
  • If the taxpayer makes $45,000, they will be taxed 12% on income up to $40,525 and 22% on everything above.
  • But before you assume that you’re going to get a hefty payout from the IRS, there are a few myths to consider that might help you reconsider not only your tax filing but also how you view tax refunds in general.
  • The IRS will not immediately seize your property if you are late in paying your taxes.

Ten to twenty years ago, a home office deduction might have been a red flag for the IRS, but not in 2022. If you are working from home, then you should claim your home office as a deduction; don’t shy away from it. You just need to be able to substantiate it with accurate record keeping. Once you have the basics down, you can start preparing taxes for money while you build on your education and learn how to prepare more advanced taxes (which is more lucrative). However, he mentions it’s important to note that any interest received on a refund is considered taxable income. Download our free guide that shows you the most common accounting mistakes made by business owners and how to avoid them.

Even though the IRS issues most refunds within 21 days, it’s possible a refund may take longer. If the IRS needs more information to process a tax return, the agency will contact the taxpayer by mail. Taxpayers should also consider the time it takes for the banks to post the refund to the taxpayer’s account.

  • If you’re a writer, that means you can deduct the cost of a replacement laptop when your old one dies.
  • Regular and exclusive use refers to you using a section of your house exclusively for your business.
  • But if you’re a salaried worker, you don’t get that same leeway — even if you’re incurring costs to do your job that your company won’t reimburse you for.
  • The federal tax rules generally focus on the work relationship that exists between the worker and employer and whether the employer has the right to control how work is done, looking at many facts and circumstances.
  • So it’s entirely possible that the major corporation being roasted on the news for paying zero taxes is involved in some or all of the above factors.
  • Find out about your state taxes—property taxes, tax rates and brackets, common forms, and much more.

There are considerably more factors involved and plenty of other things that can send up red flags. Although individuals with income exceeding $100k tend to get audited almost twice as often, there’s still a 1% chance of getting audited if you fall beneath that threshold.

Let an expert do your taxes for you, start to finish with TurboTax Live Full Service. Or you can get your taxes done right, with experts by your side with TurboTax Live Assisted. Just answer simple questions, and we’ll guide you through filing your taxes with confidence. While you shouldn’t avoid itemizing if you have the requisite expenses, for most taxpayers this isn’t an issue—more than half of all taxpayers don’t even itemize deductions, using the standard deduction instead. If you’ve never filed your own taxes, you might be scared off by all the mystery and complexity that seemingly surrounds the process.

Myths About Doing Your Own Taxes

For those who owe less than $205, the penalty is the amount due, plus 100% of the unpaid tax. Taxes—sales and property taxes on the hardware, available deductions, income taxes on the resulting profit—will all play a big part in her cost calculation. Everyone likes to receive money, but if you’re one of the millions of taxpayers who received a tax refund last filing season, you should think twice about celebrating. Over the years, numerous court cases, representing just about every argument, have upheld the federal government’s power to collect income taxes.

And, receipt of a 1099 is irrelevant to determining whether you are an employee under the FLSA, FMLA, or MSPA. With tax laws changing every year and contradictory tax advice all over the internet, it can be hard to know which information is fact or fiction. And when it comes to your taxes, it’s important to follow the IRS’s rules to avoid fees and penalties. We’ve compiled a list of some of the most common tax myths and misconceptions so you can spend less time worrying and more time preparing. Then, “if you need to file an extension, you don’t have a payment due because you would have been making those payments throughout the year.” Under federal tax laws, you are not an independent contractor for tax purposes just because you receive a 1099.

Avoid any tax professional whose fees are based on your refund or who claims they can get you a bigger refund than a competitor. Every individual child can only be claimed by a single taxpayer, whether you and your spouse are filing jointly or separately. For divorced and separated parents, the claim goes to the parent who has custody of the child for most of the year.

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